Vernon Hills, Il. Jan. 21—-Wickes Inc. announced that the Company filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code to facilitate a restructuring of the Company's debt.
In conjunction with the filing, Wickes has received a commitment for $100 million in new debtor-in-possession (DIP) financing, which will replace Wickes' current senior credit facility. Upon Bankruptcy Court approval and execution of definitive agreements, the DIP financing will provide funding for the Company's ongoing operations.
"Wickes has been operating with a highly leveraged balance sheet for many years," said Jim O'Grady, President and Chief Executive Officer of Wickes. "Our balance sheet problems have been exacerbated by the fact that, in recent years, we've strayed away from our core businesses and made significant capital expenditures on non-core businesses," he said. "We simply could not continue to operate effectively with our high debt levels and we made every effort to work with our banks and bondholders to restructure our debt out of court. However, these efforts were unsuccessful."
On Jan. 12, Wickes announced that it had terminated its exchange offer with respect to its 11 5/8% Senior Subordinated Notes due to the fact that the Company did not receive a sufficient percentage of tenders. "When we determined that we would be unable to complete the exchange offer, Wickes' senior management team and our Board of Directors carefully examined all of our options. We collectively concluded that Chapter 11 reorganization is the best course for Wickes," said O'Grady. "The decision to seek protection under Chapter 11 will allow Wickes to restructure its balance sheet in a controlled and efficient forum while we continue to operate our businesses."
O'Grady said that the Company intends to use the protections afforded by the Chapter 11 process to de-leverage its balance sheet while it continues to reorganize and refocus its operations. "Since the beginning of 2003 we have taken a number of steps to strengthen our balance sheet, improve our operations and refocus on our core businesses," said O'Grady. "We have reduced and better managed our costs. We have improved sales, profitability and employee productivity by returning the Company to a more traditional operating structure. Finally, we have changed our corporate culture in a manner that will allow our employees to focus more on building business relationships and providing our customers with an even higher quality of service than before," said O'Grady. "At the same time, we have been analyzing our business and identifying which of our assets are core vs. non-core. Based on those analyses, we have discontinued our non-essential programs and have been selling some of our non-strategic assets where we can realize good value for those assets or for other strategic reasons.
"Having already made great strides in reorganizing and refocusing our operations, we are now able to work on restoring our financial stability and ensuring our long-term financial health. With much of our operational improvements already in place, Wickes is well positioned to take advantage of the true value of our businesses and emerge from Chapter 11 as a strong, profitable company," said O'Grady.
During the Chapter 11 proceedings, Wickes will continue to operate in the ordinary course of business. The Company said that it expects to receive Court approval to, among other things, continue payment of pre-petition and post-petition wages, salaries, incentive plans, and medical, dental, disability, vacation and most other benefits. The Company has sufficient financing to meet its ongoing obligations and intends to continue doing business with its customers and vendors in the same manner as before.
